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IMPORTANT HIGHLIGHTS of ECONOMIC SURVEY 2014

CHAPTER 1: STATE OF THE ECONOMY AND PROSPECTS

Economy to grow in the range of 5.45.9 per cent in 2014-15 overcoming sub-5percent growth.

Growth slowdown was broad based, affecting in particular the industry sector. Aided by favourable monsoons, agricultural and allied sector registered a growth of

4.7 per cent in 2013-14. Industry and Service sectors also witnessed slowdown.

CHAPTER 2: ISSUES AND PRIORITIES

Reforms needed for long term-growth prospects on 3 fronts- low and stableinflation regime, tax and expenditure reform and regulatory framework.

Survey suggests removal of restriction on farmers to buy, sell and store their produceto customers across the country and the world.

Rationalisation of subsidies on inputs such as fertilizer and food is essential. Government needs to eventually move towards income support for farmers and poor

households.

CHAPTER 3: PUBLIC FINANCE

The fiscal policy for 2013-14 was calibrated with two-fold objectives; first, to aidgrowth revival; and second, to reach the FD level targeted for 2013-14.

The Budget for 2013-14 followed the policy of revenue augmentation and expenditurerationalization to contain government spending within sustainable limits.

The fiscal outcome of the central government in 2013-14 was achieved despite themacroeconomic challenges of growth slowdown, elevated levels of global crude oil

prices, and slow growth of investment.

CHAPTER 4: PRICES AND MONETARY MANAGEMENT

High inflation, particularly food inflation, was the result of structural as well asseasonal factors.

IMF projects most global commodity prices are expected to remain flat during 2014-15.

The RBI with a view to restoring stability to the foreign exchange market, hiked shortterm interest rate in July and compressed domestic money market liquidity.

CHAPTER 5: FINANCIAL INTERMEDIATION

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RBI has indentified five sectorsinfrastructure, iron and steel, textiles, aviation andmining as the stressed sectors.

Public sector banks (PSBs) have high exposures to the industry sector in generaland to such stressed sectors in particular.

The New Pension System (NPS), now National Pension System, introduced for thenew recruits who join government service on or after January 2004, represents amajor reform of Indian pension arrangements.

The next wave of infrastructure financing will require a capable bond market.

CHAPTER 6: BALANCE OF PAYMENTS

The Indias balance-of-payments position improved dramatically in 2013-14 withcurrent account deficit at US $ 32.4 billion as against US$ 88.2 billion in 2012-13.

Indias foreign exchange reserves increased from US$ 292.0 billion at end March2013 to US$ 304.2 billion at end march 2014.

Indias external debt has remained within manageable limits due to the external debtmanagement policy with prudential restrictions on debt varieties of capital inflows.

CHAPTER 7: INTERNATIONAL TRADE

World trade

World trade volume which decelerated to 2.8 per cent in 2012 has shown signs ofrecovery in 2013, albeit slow with a 3.0 per cent growth. The sharp fall in imports and moderate export growth in 2013-14 resulted in a sharp

fall in Indias trade deficit by 27.8 per cent. In April-May 2014, trade deficit declined by 42.4 per cent.

CHAPTER 8: AGRICULTURE AND FOOD MANAGEMENT

Record food grains and oilseeds production of 264.4 million tonnes (mt) and 32.4 mtis estimated in 2013-14.

Horticulture production estimated at 265 mt in 2012-13 has exceeded the productionof foodgrains and oilseeds for the first time.

Due to higher procurement, stocks of foodgrains in the Central Pool have increasedto 69.84 million tonnes as on June 1, 2014.

The net availability of foodgrains increased to 229.1 million tonnes and that of edibleoils to 12.7 kg per year in 2013.

CHAPTER 9: INDUSTRIAL PERFORMANCE

The latest gross domestic product (GDP) estimates show that industry grew by just1.0 per cent in 2012-13 and slowed further in 2013-14, posting a modest increase of0.4 per cent.

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CHAPTER 10: SERVICES SECTOR

India ranked 12thin terms of services GDP in 2012 among the worlds top 15countries in terms of GDP (at current prices).

India has the second fastest growing services sector with its CAGR at 9.0 per cent,just below Chinas 10.9 per cent, during 2001 to 2012.

In 2013-14, FDI inflows to the services sector (top five sectors includingconstruction) declined sharply by 37.6 per cent to US$ 6.4 billion compared to anoverall growth in FDI inflows at 6.1 per cent resulting in the share of the top fiveservices in total FDI falling to nearly one-sixth.

CHAPTER 11: ENERGY, INFRASTRUCTURE AND COMMUNICATIONS

Major sector-wise performance of core industries and infrastructure services during2013-14 shows a mixed trend. While the growth in production of power and fertilizerswas comparatively higher than in 2012-13, coal, steel, cement, and refinery

production posted comparatively lower growth. Crude oil and natural gas productiondeclined during 2013-14.

The performance of the coal sector in the first two years of the Twelfth Plan has beensubdued with domestic production at 556 MT in 2012-13 and 566 MT in 2013-14.

A total length of 21,787 km of national highways has been completed till March 2014under various phases of the NHDP. In spite of several constraints due to the economicdownturn, the NHAI constructed 2844 km length in 2012-13, its highest ever annualachievement. During 2013-14 a total of 1901 km of road construction was completed.

From the infrastructure development perspective, while important issues like delays inregulatory approvals, problems in land acquisition & rehabilitation, environmentalclearances, etc. need immediate attention, time overruns in the implementation of

projects continue to be one of the main reasons for underachievement in many of theinfrastructure sectors.

CHAPTER 12: SUSTAINABLE DEVELOPMENT & CLIMATE CHANGE

Human- induced Greenhouse gas (GHG) emissions are growing and are chieflyresponsible for climate change.

The world is not on track for limiting increase in global average temperature tobelow 2C, above pre-industrial levels. GHG emissions grew on average 2.2 per cent

per year between 2000 and 2010, compared to 1.3 per cent per year between 1970 and2000.

There is immense pressure on governments to act through two new agreements onclimate change and sustainable development, both of which will be globalframeworks for action to be finalized next year.

The cumulative costs of Indias low carbon strategies have been estimated at aroundUSD 834 billion at 2011 prices, between 2010 and 2030.

CHAPTER 13: HUMAN DEVELOPMENT

Indias Human Development Rank and performance

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According to HDR 2013, India has slipped down in HDI with its overall globalranking at 136 (out of the 186 countries) as against 134 (out of 187 countries) as perHDR 2012. It is still in the medium human development category.

The poverty ratio (based on the MPCE of ` 816 for rural areas and `1000 for urbanareas in 2011-12 at all India level), has declined from 37.2 per cent in 2004-05 to 21.9

per cent in 2011-12. In absolute terms, the number of poor declined from 407.1 million in 2004-05 to

269.3 million in 2011-12 with an average annual decline of 2.2 percentage pointsduring 2004-05 to 2011-12.

During 2004-05 to 2011-12, employment growth [CAGR] was only 0.5 per cent,compared to 2.8 per cent during 1999-2000 to 2004-05 as per usual status.